Unfinished hotel mars Sylva landscape

The fate of an unfinished Clarion Inn in Sylva is up in the air after a bank foreclosed on the property earlier this month.

The developer burned through a $5.1 million construction loan for the hotel but ran out of money before finishing the job. Meanwhile, the developer filed for bankruptcy and still owes the contractor $1.9 million.

The boarded-up windows and a weed-engulfed sign of the abandoned hotel casts a cloud over the main commercial thoroughfare in Sylva. The four-story hotel seems doubly tall given its placement on a high, steep bank above the road, its bulk now a prominent feature against the mountain skyline.

Sylva Town Commissioner Maurice Moody hopes that someone will step in to finish the construction and open the hotel.

“There is too much money in it to sit there and do nothing. If it does sit there and do nothing it will become an eyesore,” said Moody, who is running unopposed for mayor this fall.

Its developers, the father-son team of Thomas and John Dowden, took out a $5 million loan in September 2007 from the Alpharetta Community Bank of Georgia.

The loan was due in full two years later. As September of this year approached, however, the Dowdens still owed nearly the full loan amount.

“It is a shame it had to stop in its tracks,” said Thomas Dowden, the father, who lives in Cashiers. “We were 80 percent done and we should be open and running by now. That’s what our plans were.”

Thomas said his son, John, was the principal manager of the project and questions should be directed to him. John Dowden, however, did not return calls seeking comment.

The Dowdens hired Cooper Construction to begin construction in September 2008. Cooper Construction of Asheville did $4.8 million in work before construction was halted. Cooper was only paid $2.9 million, however, leaving the company holding the bag on $1.9 million in labor and materials that it already expended but has been unable to recoup.

“It has been a terrible, terrible, terrible hit to this 42-year-old company,” said Larry Rocklin, the general manager.

Rocklin said the loss has been difficult for the company to absorb, despite being the third largest contractor in Western North Carolina. The family-owned business has 60 employees currently.

Initially, the Dowdens planned to build a three-story Sleep Inn, Rocklin said. But along the way, they decided to upgrade it to a four-story Clarion. Rocklin said they miscalculated the extra cost of the additional story, which requires significantly more structural support.

“That’s where he blew it,” Rocklin said.

The Dowdens’s plan was to seek additional financing from the same bank that made the original loan. When that fell through, they sought other investors to no avail.

“I’m afraid what happened is the bank wouldn’t provide any further monies to finish the project,” Thomas Dowden said. “With all the bank problems going on since last fall, we got caught up in all that. We went out and found some new investors but couldn’t get it structured properly.”

The construction contract with Cooper Construction was $6.33 million — $1 million more than the initial construction loan, not counting additional costs such as architecture fees, furnishings and water and sewer connections.

Rocklin said he didn’t realize until it was too late that the Dowdens didn’t have enough money for the upgraded design.

“The bank never had any intention of giving him additional money,” Rocklin said.

In late December 2008, just a few months into the construction, Cooper filed a lien against the property. By February 2009, however, John Dowden had filed for Chapter 7 bankruptcy.

The bank got permission from the bankruptcy court to proceed with foreclosure in July. A foreclosure sale was initially on tap for late August.

Cooper Construction managed to stave off the sale for a month. With the developer in bankruptcy protection, Cooper’s only recourse was a claim against the tangible property. Once it fell to a new owner or was repossessed by the bank, that claim would be harder to make.

Cooper has a lawsuit prepared to go after the bank for the outstanding balance on the construction work.

“It then becomes a decision of do we want to push forward with a lawsuit with a chance of winning or a chance of possibly losing,” Rocklin said.

In addition to the $2.9 million paid out to Cooper Construction, the Dowdens spent at least $1.4 million in additional costs related to the project: $480,000 on land, $270,000 on water and sewer hook-ups, $60,000 on a franchise fee to Clarion, $200,000 on architecture and $400,000 on furnishings and equipment, according to court documents.

The total — $4.3 million — leaves $800,000 of the initial construction loan unaccounted for in court documents. Rocklin said he has been unable to determine how the full balance of the construction loan was spent.

Clarion Hotel, which is one of several brands under Choice Hotels, has no interest in stepping in to take over the proerty, according to a spokesperson.

“We don’t own or operate any of our properties. They are all individually franchised,” said Heather Soule, spokesperson for Choice Hotels.

Soule said the company has seen a national slowdown in new hotels coming online over the past year.

“It is taking longer for new construction to get off the ground and find the financing to do so. People are having to wait to get that construction loan,” Soule said.

Exactly what Alpharetta Community Bank will do with the hotel now is anyone’s guess. As for what happens now, Rocklin doesn’t thinks they can sell it for enough to recoup the original $5.3 million loan. The bank will either have to sell it at a loss or hire someone to finish it then sell it, he said.